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  • By failing to advise clients on the climate risks in a transaction, lawyers may be exposing themselves to liability, disciplinary action and/or reputational damage.
  • It is open to the courts to find that a duty of care exists to advise on climate risks where a lawyer is aware of obvious risks, professes to have specialised expertise relevant to climate, and/or where a client is vulnerable.
  • A lawyer may be able to discharge their duty by bringing an issue to a client’s attention and recommending they seek further specialist advice, or by specifically excluding advice on climate risks from their retainer.

To discharge their professional duty of care, lawyers must advise and warn their clients on a range of potentially relevant risks in the transaction. Despite increased understanding of the physical risks associated with climate change-related weather events such as flooding, bushfires and coastal erosion, it is not yet common practice for lawyers to advise or warn their clients on how these physical risks may impact transactions. This is likely due to:

  • lack of clear practical or judicial guidance on how climate risks may affect the provision of legal advice;
  • the limited availability of site-specific information on climate risks to properties; and
  • the common (yet often mis-held) assumption that a lawyer’s role is limited to advising on the law, rather than the law’s practical intersection with clients’ financial and other objectives.

In considering whether climate risks form part of a lawyer’s professional duty, it is important to understand that climate risks encompass not just physical risks, but also transition risks – being those risks arising from the behaviour of regulators, commercial institutions and the community at large – and most relevant to this article, liability risks.

By not adequately addressing how physical and transition risks may impact their clients and their assets, lawyers are exposed to liability risk. Liability risk is the risk that clients and others will seek compensation from their professional advisors for loss suffered. Lawyers could also expose themselves to potential disciplinary action under the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, as well as reputational damage and business loss.

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